Just download the file, extract it, open a terminal window, cd to the folder where you extracted the archive, and run sudo ./installer && ./VDesk.
Next you'll get a very simple wizard which allows you to use a video file or a screensaver as your wallpaper.

The Compiz-plugins-livewallpapers project has been abandoned by its developer, in order to be rewritten as a standalone application.
That's why you should now remove the package compiz-plugins-livewallpapers and the ppa fyrmir/compiz-plugins, and add the ppa:fyrmir/livewallpaper-stable and then install the package livewallpaper.

Animated backgrounds are already supported and Ubuntu already ships with some example of wallpapers that change through the day. The only thing missing (as far as I know) is a tool to create such wallpapers.

You can find an example in /usr/share/backgrounds/contest/background-1.xml.

I don't think this is quite what the OP is looking for. They probably want a wallpaper that can actually be seen moving in real time, not just change at specified times.
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Christopher Kyle HortonMar 15 '12 at 16:09